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Legal Update

Brazil: Tax benefits may become misconduct in public office due to amendment of Law No. 8.429/92

26 January 2017
Tauil & Chequer Legal Update

On December 30 2016, Complementary Law No. 157/2016 was published in the Official Gazette of the union, modifying Complementary Law No. 116/2003, which contains general ISS rules. In order to insure its effectiveness, Federal Law No. 8.429/92 was also amended by the addition of new conduct to the list of acts which constitute misconduct in public office.

Beyond unjust enrichment, misappropriation of public funds and violation of the public administration principles, irregularities that were already outlined in Federal Law No. 8.429/92 in its 9th, 10th and 11th articles, the legislative authority added a new situation of misconduct in office: the improper granting, application or maintenance of financial benefits in contradiction to article 8–A of Complementary Law No. 116/2003, which establishes a minimal percentage of service taxation.

This addition included in Section II-A, article 10–A, of Federal Law No. 8.429/92 has stringent penalties, which include (i) the loss of public office; (ii) the suspension of political rights from 5 to 8 years, and (iii) a fine 3 times higher than the improper benefit granted.

If well applied, the new policy shall increase the tax revenue of Municipalities and guarantee greater isonomy between Public Administration and the private companies they deal with.

For more information in relation to this legal update, please contact .

Observations in this update about Brazilian law are by Tauil & Chequer Advogados and are not intended to provide legal advice. Any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.

Authors

  • Luís Inácio Lucena Adams
    T +55 61 3221 4321
  • Vilmar Gonçalves
    Senior Counsel
    T +55 21 2127 4227
  • Daniel Becker
    Associate
    T +55 21 2127 1640
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